ACC 284 Documents

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CHAPTER
2
AUDIT PLANNING
2-1. Audit risk: The risk that the auditor may unknowingly fail to appropriately modify
his/her opinion of financial statements that are materially misstated.
Inherent risk: Relates to the susceptibility of an account balance or c

CHAPTER
20
20-1.
WRITING THE AUDIT REPORT
The purposes of the scope paragraph in the auditors report are to inform the
financial statement users that the audit was conducted in accordance with
generally accepted auditing standards, in general terms what t

CHAPTER
13
SUBSTANTIVE TESTS OF
PREPAID EXPENSES AND
DEFERRED CHARGES
13-1.
Rights and obligations are tested by examining the insurance policies and
confirming the policy with insurance carriers. In turn, an auditor tests valuation
by recalculating unexp

CHAPTER
12
12-1.
SUBSTANTIVE TESTS OF
INTANGIBLE ASSETS
The decision whether a given expenditure on intangible asset to be treated as
expense or asset requires judgment. Expenditure giving rise to future benefits will
be classified as assets while those e

CHAPTER
11
SUBSTANTIVE TESTS OF
PROPERTY, PLANT AND
EQUIPMENT
11-1.
Factors which facilitate the auditors verification of plant and equipment but are
not applicable to audit work on current assets include the following:
(a) High peso amount of individual

CHAPTER
10
SUBSTANTIVETESTSOF
INVESTMENTS
10-1.
The CPAs would accept a confirmation of the securities on hand from the
custodian in lieu of their personal inspection of the securities after they had
investigated and satisfied themselves as to the standin

CHAPTER
9
SUBSTANTIVE TESTS
OF INVENTORIES AND
COST OF GOODS SOLD
9-1. Substantiation of the figure for inventories is an especially challenging task because of
the variety of acceptable methods of valuation. In addition, the variety of
materials found in

CHAPTER
8
SUBSTANTIVE TESTS
OF RECEIVABLES AND SALES
8-1. Tests of details of financial balances are designed to determine the reasonableness of
the balances in sales, accounts receivable, and other account balances which are
affected by the sales and col

CHAPTER
7
SUBSTANTIVE TESTS
OF CASH
7-1. The quoted statement is not accurate. In their work on cash, auditors are primarily
concerned with the risk of an overstatement of the cash balance. The listing of a
non-existent or fictitious check on the outstand

CHAPTER
6
AUDIT OF THE FINANCING AND INVESTING
CYCLE: TESTS OF CONTROLS AND
SUBSTANTIVE TESTS OF TRANSACTIONS
6-1. Investing activities include an entitys activities to invest in debt or equity securities of
other entities and investments in property, pla

CHAPTER
5
AUDIT OF THE EXPENDITURE CYCLE:
TESTS OF CONTROLS AND SUBSTANTIVE TESTS
OF TRANSACTIONS - II
5-1. The following duties must be separated in the preparation of payroll: hiring, reporting
and approval of time, paycheck preparation, check signing,

CHAPTER
4
AUDIT OF THE EXPENDITURE CYCLE:
TESTS OF CONTROLS AND SUBSTANTIVE TESTS
OF TRANSACTIONS - I
4-1. Transactions in the expenditure cycle are recorded in the purchases and cash payments
journal or in the voucher register and the check register. Rel

CHAPTER
3
AUDIT OF THE REVENUE AND COLLECTION
CYCLE: TESTS OF CONTROLS AND
SUBSTANTIVE TESTS OF TRANSACTIONS
3-1. Directly. Higher levels of control risk induce auditors to audit larger samples of
receivables, with confirmation date closer to the fiscal y

CHAPTER
1
OVERVIEW OF THE
AUDIT PROCESS
1-1. Auditors reports are important to users of financial statements because they inform
users of the auditors opinion as to whether or not the statements are fairly stated
or whether no conclusion can be made with

C HAPTER
8
8-1.
SUBSTANTIVE TESTS
OF RECEIVABLES AND SALES
Tests of details of financial balances are designed to determine the reasonableness
of the balances in sales, accounts receivable, and other account balances which are
affected by the sales and co